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As shoppers flock to the stores today for the holiday opener, financial counselors urge a reality check. Overspending can be a problem if shoppers don't have a plan. (Tribune photo by Ron Adams)

WILLMAR -- Scrimp or splurge?

As shoppers flock to the stores today for the holiday opener, financial counselors urge a reality check.

Consumers who fail to set spending limits or who don't have a plan are among the most likely to wind up overspending during the Christmas season, said Cherrish Holland, a consumer credit counselor with Lutheran Social Service in Willmar.

"Know what that stopping point is for you, whether it's a dollar amount or when your list is done," she said.

Researchers at the University of St. Thomas who study consumer spending patterns predict shoppers will be in a better mood this year. They're forecasting a 3.4 percent increase in spending for holiday gifts, and consumer optimism matching that of the pre-recession years.

Yet Holland and other financial counselors see no slowdown in their client activity.

More people have gone back to work, Holland said. But many remain unemployed and have either used up or are nearing the end of their unemployment benefits, she said. Underemployment also plagues many workers whose paychecks have shrunk as the result of fewer hours or no overtime.

"Mortgage delinquencies are still really high, even in our own community," Holland said. "It can be really difficult for people."

A new population of the financially struggling has emerged: educated, middle-class households where one or more of the breadwinners is out of work or underemployed and having difficulty adjusting to less discretionary spending.

Medical debt is weighing more on consumers too, Holland said. "We're seeing a lot more of that. Nobody has a $35 copayment anymore."

She said consumers at risk of overspending during the holidays tend to fall into two groups: those who fail to plan how much they'll spend on gifts, entertainment, donations and other expenses, and those who live paycheck to paycheck and haven't set anything aside.

One thing she suggests to clients is to shop purposefully.

"Take time to shop when you're relaxed. It shouldn't be last-minute," she said. "Get a good list and make a good list. Give someone something they will really need and use."

Households with extremely tight budgets might replace gift-giving with a family service project, a donation to a favorite charity or spending meaningful time on a project or person who's important to them, Holland suggested.

The emotional aspect of spending on gifts can make it difficult for people to cut back, particularly when they're already weary of economizing, she said. "That is extremely hard. Long-term frugality gets tiresome."

Setting limits can be especially hard for parents whose child has requested something expensive for Christmas, she noted. A generation ago, children may have wanted something that cost $25 or $50; nowadays their wish list might include something with a $500 price tag.

"It is hard as a parent to keep that scale in mind," Holland said. "We really encourage trying to set limits with kids. We put the focus on a budget and a spending plan."

Although families might be reluctant or embarrassed to cut back on the volume of gifts, clients who have done so often report later that they're glad they did, she said. "Inevitably they say, 'This was a great idea.' They're just relieved. Just have the conversation with family and friends."

To give consumers a realistic idea of their Christmas debt burden, Lutheran Social Service has posted a Scrooge-o-meter on its website at www.lssmn.org/scrooge. Users can plug in how much they plan to charge, the interest rate and monthly payment amount, and the site will calculate how long it'll take to pay it off, the total payment and total interest.

The collective excitement about Black Friday is hard to avoid, Holland said. "It's part of the culture. It's part of the conversation."

And in a U.S. economy that relies heavily on consumer spending, a certain amount of holiday shopping helps stimulate economic growth -- "but not at the risk of adding to credit card debt and overspending," she said. "That can be very risky for individuals and families."